Bradley v. Atlantic Guaranty & Title Insurance

98 N.J.L. 741 | N.J. | 1923

The opinion of the court was delivered by

Walker, Chancellor.

The facts of this case sufficiently appear in the opinion of the Supreme Court, but we think that court was in error in holding that the guaranty of the payment of the mortgages did not extend to the decree of foreclosure in which the mortgages were merged. We think that when the mortgages became so merged the guaranty thereafter would become one in effect guarantying the payment of the decree rather than of the mortgages themselves, because the guaranty was to pay the mortgage debt, and, upon foreclosure, the debt was merged into the decree and became a debt of record, remaining at all times a debt. See Hudson Trust Co. v. Boyd, 80 N. J. Eq. 267, 269; Sanford v. Wellborn, 85 Id. 577, 582. Another thing: The guaranteed holder of a mortgage is certainly entitled to recover from his guarantor the deficiency on his mortgage debt as ascertained upon a foreclosure sale; for, by statute, the first proceeding is to foreclose the mortgage, and if tire mortgaged premises do not sell for a sum sufficient to satisfy the mortgage debt, &c., then it is lawful to proceed on the bond for the deficiency. 3 Comp. Slat., p. 3421, § 2. And an assignee of a chose in action may sue thereon in his own name. See Jemison v. Tindall, 89 N. J. L. 429. This view, however, does not lead to reversal. On the contrary, the judgment must be affirmed, and that on ground taken by the Supreme Court to the effect that the guaranty was not available to Dick after his assignment to Howard.

After the defendant company had issued to Dick 'in his lifetime its policies of guaranty on two certain mortgages, Dick assigned the mortgages to Howard, who did not notify the company of the assignment, and afterwards sued Dick in chancery for a rescission of the contract whereby he became the assignee of Dick, because of false representations of the latter concerning priorities, and he, Howard, obtained a final decree under which Dick repaid the purchase-money and took a reassignment of the mortgages. They were foreclosed in the rescission suit, and a deficiency resulted in the sale. Dick died and his executrix then brought this suit to recover on the guaranties. The Supreme Court affirmed the trial judge’s direction of a verdict for defendant because the guaranties provided that the defendant company should not be liable if the mortgages were assigned, unless it had notice and consented, and it was required to consent if it had notice; hut it was never notified. "VVe hold that when title to the mortgages was divested out of Dick without the guarantees having followed it by notice of the assignment and consent of the guarantor under the contract, the guaranty terminated, and could only have been revived by the reassignment to Dick through the guarantor consenting thereto for a consideration, which was not done. See Grob v. Gross, 83 N. J. L. 430. In all other respects we are satisfied with the reasoning of the Supreme Court.

Let the judgment be affirmed, with costs.

For affirmance — The Chancellor, Parker, Bergen, Minturn, Kalisch, Black, Kateenbach, Heppenheiher, Ackerson, Van Buskirk, JJ. 10.

For reversal — None.